3UK’s CEO talks about how the network is planning to address its ‘legacy perception problem’ and why bidding for the iPad would be like trying to sign a premiership footballer
I’ve just got back from a fascinating press briefing with mobile carrier 3UK’s CEO Kevin Russell and CTO Graham Baxter, billed as a discussion of the “themes, trends and challenges that will shape the mobile industry in the UK in 2010.” Although the subtext was something more along the lines of: how is 3 addressing what was described as its legacy perception problem.
People still, wrongly or rightly, often associate the network with poor coverage and/or service. This despite the fact that the network’s coverage and capacity has and is improving and that in my view 3 is one of the most, if not the most, innovative of the UK networks, especially on pricing, data services and positioning.
Here’s what I learnt during two presentations and the very frank Q&A that took place afterwards:
3 has an image problem that needs be addressed.
Despite investing heavily in its network and seeing the benefits in terms of coverage, speed and capacity, the number one issue facing the network is how to shake off what was described as its ‘legacy perception’ problem. If I remember correctly, it’s the one thing that keeps Russell up at night. Two ways 3 can address this.
1) Organically by letting the network speak for itself as 3 attracts and retains subscribers who can experience the improvements for themselves
2) Try to create a big ‘catalyst’ moment, perhaps through acquiring a ‘hero’ handset or device as O2 did with the iPhone. Russell suggested that it could be a combination of both but wouldn’t go into specific details with regards to 3’s marketing strategy.
In terms of reality, 3 has been on a steep learning curve with regards to huge increases in mobile data usage by its customers, says Russell. But that the network has steadily improved its data coverage and capacity, in part through its network share with T-Mobile, and that 3 is on track to have over 12,000 base stations up from just over 7,000 by the end of October 2010.
It was also pressed home by CTO Graham Baxter that in the end all of the carriers faced the same challenge. The only real way to increase capacity is to acquire more sites (base stations/cells) and more spectrum. 3 is making great strides with the former but the latter is in the hands of the government/regulator. That’s why 3 is particularly worried about the Orange/T-Mobile merger.
Apple iPad maybe?
While Russell didn’t appear to totally rule out 3 offering a subsidised iPad (or perhaps a SIM-only offering that targets owners of Apple’s device) he acquainted bidding for an exclusive to trying to sign a top premiership footballer. Not only does everyone want the same player, but as a result there is a hefty price to play. A price that Russell suggested wasn’t usually worth playing. And besides, 3 likes to ‘swim in the opposite direction’ to the rest of the industry.
He also wasn’t familiar with the new microSIM ‘standard’ that the iPad requires, which provided a slightly awkward moment.
Spotify’s ‘soft launch’
3 began offering the music streaming service Spotify with a single handset – the HTC Hero – in November of last year. It was a relatively soft launch, conceded Russell, and that the network was waiting till it could offer Spotify on more than one device before giving the service a much greater push. He also said that 3’s retail bricks ‘n’ mortar stores were the best channel to promote offerings like Spotify.
As for more handsets that support the service, Russell talked of a half-dozen rather than one or two more. Not surprising since Spotify has clients for Symbian, Android and the iPhone.
YouTube not iPlayer is the bandwidth hog
It’s YouTube not the iPlayer which stands out as 3’s biggest bandwidth hog. Although Baxter explained that in some ways the problem takes care of itself. YouTube throttles its own bandwidth at peak times so it’s often out of 3’s control anyway. In comparison, iPlayer hardly registers. Why?
No reason was offered but I think it could be to do with the way 3’s handsets support iPlayer. All of the Symbian devices support downloads not just streaming. Perhaps users are grabbing content over WiFi before leaving the house. Also worth noting: there’s currently no official iPlayer client for Android.
As you’d expect, Facebook has been a big driver of data usage on handsets too, though obviously nowhere near as bandwidth intensive as streaming video.
3’s been surprised by the Terminate The Rate campaign’s support
Russell said he’d been surprised by how well the carrier’s Terminate The Rate campaign had resonated with the public and members of parliament. The campaign is attempting to influence the decision Ofcom makes on reducing the charge of Mobile Termination Rates (MTRs). From the campaign website:
MTRs are charged when you call somebody on a different mobile network, or call a mobile from your land-line. Their network will charge yours a fee for receiving (or ‘carrying’) the call. This is a Mobile Termination Rate. The current charge is around 4.7p or more for every minute you’re connected – charges we think are excessive and distort competition.
Of course, 3 is particularly exposed to MTRs since it has less subscribers than its competitors so, inevitably, will have to pay out a lot more than it gets in.
Data roaming charges are “stupid”
Somewhat related to MTRs is the charge levied on customers when they consume data in other parts of the EU or elsewhere abroad. Russell highlighted the difference in price domestically and internationally.
Typically, 5GB of mobile broadband will cost £15 here in the UK, while it’s something like £6,000 when roaming. Russell said this is “stupid” and that the issue needs to be addressed now not sometime in the future as has been argued by others in the industry.